India’s Incentive Scheme 2024: A Legal and Strategic Analysis for International Productions
by Anushree Rauta (Equity Partner, Head of Media and Entertainment Practice), Amal Goenka (Associate Partner) and Neha More (Senior Associate)
INTRODUCTION
The landscape of international film production in India stands at a pivotal moment of transformation with the introduction of comprehensive incentives scheme for production of foreign films in India (“Incentive Scheme”) by the Ministry of Information and Broadcasting (“MIB”).
This initiative is managed by the newly established Film Facilitation Office (“FFO”), operating under the National Film Development Corporation (“NFDC”). The FFO’s main goals are to promote global collaboration in filmmaking and to simplify the production process for both international and domestic filmmakers in India.
This Incentive Scheme aims to position India as a premier destination for international film and television production, leveraging the country’s diverse locations, skilled workforce, and burgeoning technological capabilities.
The Incentive Scheme is formulated into two parts:
- Part I deals with ‘Incentives For Production Of Foreign Films In India’ (“Part I”); and
- Part II deals with ‘Incentives For Official Co-Productions Under Audio-Visual Coproduction Treaty’ (“Part II”).
In this article, we delve into the legal framework and strategic implications of the Incentive Scheme, by aiming to provide international producers with a comprehensive understanding of how to effectively engage with and benefit from India’s new film incentive landscape.
PART I: INCENTIVES FOR PRODUCTION OF FOREIGN FILMS IN INDIA.
Overview of Part I:
International productions which have been granted permission to shoot in India (either whole or in part) by the MIB or Ministry of External Affairs (“MEA”) (particularly for documentaries) after April 1, 2022 are eligible for the incentives as laid down herein in Part I of this article.
The guidelines are divided into two main sections:
- Section A: Covers projects involving live shoots in India.
- Section B: Addresses projects focused on pure animation, post-production, and visual effects (PPA) services without any live shoot component in India.
- For projects that combine both live shooting and post-production work in India, the application process falls under the live shoot category (Section A). In these cases, the overall caps and other conditions will follow the live shoot guidelines.
This structure allows the incentive program to cater to different types of film productions, recognizing the diverse nature of projects that might be interested in working in India, however, it is pertinent to note that MIB retains discretion over interpretation and application of these guidelines.
To provide a clearer understanding of the Incentives for Production of Foreign Films in India (Part I), we have outlined the key components of the scheme below:
A) Qualifying Production Expenditure & Key Aspects:
Qualifying Production Expenditure (“QPE”) is an expenditure incurred by the line producer/line production services company/post-production company/animation company (“Applicant”) (on behalf of international producer or otherwise) wholly in respect of the applicable pre-production, production (incl. principal photography) post-production, visual effects and animation and attributable to the categories of goods and services sourced and/or provided in India.
The below table outlines some of the key aspects of QPE calculation and reimbursement mechanisms for both live shoots and post-production, visual effects, and animation (PPA) services:
| Key Aspects | Live Shoots | Post Production, Visual Effects and Animation (PPA) Services |
|---|---|---|
| Minimum threshold: QPE |
INR 3 crore/ INR 30 million in India. No minimum QPE requirement for documentaries. |
INR 1 crore/ INR 10 million. |
| Incentive/Reimbursement Cap: | INR 30 crore/ INR 300 million. | INR 30 crore/ INR 300 million. |
| Base reimbursement percentage: | Up to 30% of the QPE | Up to 30% of the QPE |
| Labour Incentive Bonus: | Additional incentive bonus of 5% in case of employment of 15% or more Indian man power (above or below-the-line), who are residents of India. | Not specifically mentioned for PPA |
| Significant Indian Content (SIC) bonus and criteria for classifying as SIC: | SIC Incentive: Additional bonus of 5%. Criteria: (i) Spend at least 25% of the total project budget in India. (ii) Cast an Indian national in one of the three lead roles, defined by screen time or presence. (iii) Employ an Indian national as a creative head of department (e.g., Director, Director of Photography, Writer, Music Director). (iv) Present a positive image of India or showcase India’s tourist attractions. |
Same incentive and criteria as live shoots. |
| Accumulation of Expenses: | QPE is calculated from the day the shooting/filming approval has been granted by the MIB or the Ministry of External Affairs (for documentaries only). | QPE is calculated from the day of submission of form for interim approval to FFO. |
B) Other key aspects with respect to QPE, as applicable for both live shoots and PPA Services:
- Applicants receiving benefits under the ‘Incentive for Audio Visual Co-production with Foreign Countries’ i.e. under Part II of the Incentive Scheme, are not eligible for reimbursement.
- The Applicant must provide evidence, if needed, that majority of funds for the production is provided by financial backers whose main office is located outside of India.
- Each Applicant can only apply for one reimbursement per project.
- The Applicant is not allowed to apply through a third party (whether related or not) and the MIB has the final say in this decision.
For PPA:
(a) In case a project has applied for incentives for live shoots, they cannot apply separately for the incentives for PPA services even if performed through a different production services company.
(b) A project must involve services that are physically undertaken at least in parts within the territory of India by a company registered in India on behalf of a foreign company.
C) List of QPE inclusions for live shoots and PPA Services:
|
Inclusions for Live Shoots |
Inclusions for PPA Services |
|---|---|
| Fees paid to line producer, line production services company and other above the line personnels (such as executive producer, director, actors, talent agencies etc) qualify as QPE but capped at 10% of total QPE for each category. | Fees paid to line producer, line production services company and other above the line personnels (such as executive producer, director, actors, talent agencies etc) qualify as QPE but capped at 10% of total QPE for each category. |
| Extras (i.e. non-speaking on camera roles) | Below-the-line talent such as film editor, production assistants etc only for their period of services in India |
| Below-the-line talent such as film editor, production assistants etc only for their period of services in India | Story (development and acquisition, if incurred in India) |
| Booking of studio facilities, rent etc | Editing |
| Acquiring props | Animation |
| Set construction | Colour grading |
| Equipment and Supplies | Booking of studio facilities, rent etc. |
| Freight provided by an Indian Supplier or made through an Indian Agent | Acquiring props |
| Accommodation and hospitality during shooting | Set construction |
| Insurance payments in India | Equipment and Supplies |
| Payment for goods/services from foreign vendors supplying the same from their Indian office/branch | Freight provided by an Indian Supplier or made through an Indian Agent |
| Songs and background music, Choreography, Recording of songs/music | Accommodation and hospitality during shooting |
| Costumes and styling | Insurance payments in India |
| Makeup and hair styling | Payment for goods/services from foreign vendors supplying the same from their Indian office/branch |
| Fringe benefits tax relating to benefits provided in India paid by the International Producer | Songs and background music, Choreography, Recording of songs/music |
| Food and beverage | Fringe benefits tax relating to benefits provided in India paid by the International Producer |
| Lab and processing charges | Food and beverage |
| Visual and digital effects, Sound effects | Lab and processing charges |
| Editing | |
| Animation | |
| DI, Color grading |
D) List of QPE exclusions for both live shoots and PPA Services:
| Exclusions for Live Shoots | Exclusions for PPA Services |
|---|---|
| All Banking fees are to be borne by the International Producer/Applicant | Indian taxes including GST, local taxes, etc. |
| Bond & Financing | Bank interest and charges |
| Option payments for book rights and Development costs | Audit fees and any fees incurred in making incentives application |
| Entertainment, Publicity and promotion | Any other expenses as decided by the SEC |
| Errors + Omissions insurance | |
| Capital Expenditure | |
| Expenses incurred out of India | |
| Money received from local source in India such as gifts, sponsorships, product placement fees, etc. | |
| Indian taxes including GST, local taxes, etc. | |
| Bank interest and charges, Audit fees and any fees incurred in making incentives applications | |
| Equipment depreciation | |
| Location – purchase or long-term leasing of land and related costs | |
| International and interstate/domestic travel (air and non-air), and local conveyance | |
| Any other expenses as decided by the SEC |
E) Eligible Requirements for Applicant Profile For Live Shoots, Post Production, Visual Effects and Animation (PPA) Services:
A production should meet the conditions as laid down below:
| Category | General Requirements |
|---|---|
| Application Type | a) Indian entity handling International Producers application. b) Direct international applications are not allowed. c) For live shoot: Application via Indian Line Producer/Line Production Services Company. d) For post-production/VFX/animation: Application via post production/VFX/animation company. |
| Required Documentation | Valid Permanent Account Number (PAN) under Income Tax Act, 1961 and valid GST Registration Certificate (CGST and SGST Act 2017). |
| Applicant Responsibilities | Making all arrangements for purchasing, hiring and production-related expenditure, on behalf of the International Producer. |
| Legal Requirements | a) Legally binding agreement between International Producer and Indian Applicant. b) Agreement must cover reimbursement process and fund distribution. c) Executed copy of an agreement must be submitted with an application. |
Restrictions:
- Only one application per project is permitted.
- No joint applications allowed and only single designated applicant entity is permitted (even if multiple there are multiple line producers or post production visual effects and animation company).
F) Eligible Production Type:
Eligible productions must be in one of the following formats:
| Production Type | Minimum Duration | Other conditions |
|---|---|---|
| Feature Films/ Animation Feature Films | 72 (seventy-two) minutes minimum duration | N/A |
| Commercial TV Shows/Series | Each episode of minimum of one broadcast of 30 mins | • Initial distribution in any medium, except cinema • Eligible per season • One reimbursement per series/season only (if the production has multiple seasons or series, each season or series will be considered a separate project). • To qualify as a series or season, every episode must feature common themes and/or dramatic elements forming a narrative structure. |
| Web Shows/Series/ Animation Series | No specified duration | • Eligible per season. • One reimbursement per series/season only (if the production has multiple seasons or series, each season or series will be considered a separate project). • To qualify as a series or season, every episode must feature common themes and/or dramatic elements forming a narrative structure. |
| Documentaries (falls within the scope of live shoots only) | 30 (thirty) minutes minimum duration | N/A |
G) Excluded Productions:
The following productions are excluded from Section A (i.e. projects involving live shoots in India): News and current affairs, quiz shows, reality shows, music videos, magazine shows, Infotainment, talk shows and lifestyle programming, productions with a primary purpose of fund-raising, productions with a primary purpose of training or corporate advertising/ promotions, sports and public events coverage.
H) Application Process:
Stage 1: Interim Approval
| Process Stage | Live Shoots | Post-Production/ VFX/Animation |
|---|---|---|
| Prior permission: | Prior permission from the MIB or the MEA (in the case of documentaries). | No prior permissions to be procured. |
| Initial Application Timing: | Application to be made prior to principal photography | Application to be made within one month of agreement execution between Indian PPA and Foreign Production. |
| Pending Documents: | Any documents/information pending to be intimated by FFO to the Applicant within 20 working days of receipt of application. | Any documents/information pending to be intimated by FFO to the Applicant within 20 working days of receipt of application. |
| Submission of Additional Documents (if any): | Within 15 working days of intimation. | Within 15 working days of intimation. |
| FFO Processing Timeline: | 20 working days after complete documentation. | 45 days after complete documentation (including evaluation from script evaluation officer (SEO) for the script and SIEC). |
| Interim Approval Certificate Validity: | For Standard projects: 12 months. For Projects with QPE of INR 20 crore or more: 24 months. |
For Standard projects: 12 months. For Projects with QPE of INR 20 crore or more: 24 months. |
Stage 2: Final Approval and Disbursal
| Process Stage | For Live Shoots and Post-Production/VFX/Animation |
|---|---|
| Timeline | Within 90 days of project completion in India |
| Documents To Be Submitted | a) Detailed expenditure statement certified by chartered accountant. b) Copies of invoices and account statements. c) Additional documents as specified in the Incentive Scheme. |
| Verification Process | a) Audit by FFO/MIB appointed auditor b) Evaluation by Special Incentive Evaluation Committee (“SIEC”) and decision of SIEC is final. |
| FFO processing time | 60 days from receipt of complete documentation |
I) Disbursement Milestones:
| Projects | Payment Milestone |
|---|---|
| Live Shoots | a) 90% disbursed directly to Applicant’s bank account. b) Balance 10% upon submission of a copy of final credits with a mention of “Filmed in India” along with FFO logo and receipt of an affidavit from the producers that the film has been released for public. |
| Documentaries & Special Cases (NOC Required) | a) 20% of the incentive to be disbursed immediately b) 70% to be disbursed on receipt of the NOC from the representative; and c) Remaining 10% to be disbursed on submission of a copy of final credits with a mention of “Filmed in India” and the logo of FFO along with the aforementioned affidavit. |
| Post – Production/VFX/Animation | a) 90% disbursed directly to Applicant’s bank account, strictly on a first-come first-served basis. b) Balance 10% upon submission of a copy of final credits with a mention of “Created in India” along with FFO logo and receipt of an affidavit from the producers that the film has been released for public. |
J) Incentive Non-Eligibility:
- If the Applicant does not apply for and receive interim approval or is not produced as per interim approval certificate letter.
- Accurate financial documentation is mandatory. Any forgery or misrepresentation in audited statements will result in permanent blacklisting and exclusion from future projects.
- For live shoots if the production was not filmed as per the permit given by the MIB or MEA (in case Documentaries), whereas for post-production/VFX/animation services if the production is not produced as per the interim approval certificate letter given by the FFO.
- The production leads to a negative impact on the natural resources and/ or the environment.
- If there is a legal dispute or until the respective ministry considers it appropriate to release the incentive.
PART II: INCENTIVES FOR OFFICIAL AUDIO-VISUAL CO-PRODUCTIONS WITH FOREIGN COUNTRIES.
Overview:
Part II of the Incentive Scheme deals with the incentives as applicable to co-productions between the foreign producers and Indian producers.
It aims to cultivate meaningful partnerships between Indian filmmakers and international producers through official co-production agreements/treaties that has been signed by India with sixteen countries such as Italy, United Kingdom, Germany, Brazil, France, New Zealand, Poland, Spain, Canada, China, South Korea, Bangladesh, Portugal, Isarel, Russia and Australia, with a view to enable co-creation of content and collaboration, effective from April 1, 2022 (“Official Co-Production Treaty/ies”).
This strategic initiative is designed to foster creative collaborations across borders, enabling producers from treaty countries to partner with Indian filmmakers in creating collaborative cinematic ventures.
A) Qualifying Co-Production Expenditure (“QCE”) And Maximum Cap of Reimbursements:
- The Incentive Scheme reimburses up to 30% of QCE. (the list inclusions and exclusions of the QCE is listed down in a table below).
- The maximum reimbursement is capped at Rs 30 crore (INR 300 million) and the disbursement is on a first-come, first-served basis only.
- The incentive is subject to the available annual budget, which is specified at the beginning of each financial year (April). For the financial years 2023-24 and 2024-25, the total available budget is Rs 150 crore (INR 1.5 billion).
- Within each year’s budget, a minimum of Rs 10 crore (INR 100 million) is reserved for “Official Co-Productions” (as defined below).
- Eligible expenses start accumulating from: (a) The day shooting/filming approval is granted by the MIB or the MEA (for documentaries only); and/or (b) For pure animation projects not requiring permissions/approvals, from the day of grant of official co-production status.
B) List Of QCE Inclusions and Exclusions:
| QCE Inclusions | QCE Exclusions |
|---|---|
| Expenditure on filmmaking facilities and locations in India. | Acquisition/licensing costs (e.g., rights to pre-existing material) |
| Expenditure on filmmaking goods sourced in India | Business overheads |
| Accommodation expenses, including reasonable per diem expenses (attributed to the country where goods/services are provided) | Marketing costs |
| Expenditure on personnel who are residents of India (whether working in India or elsewhere) | Trade association fees |
| Delivery costs | |
| Financing cost | |
| Insurance and completion bond | |
| Contingent payments | |
| Fees reinvested into the same project | |
| International and interstate/domestic travel (air and non-air), and local conveyance |
C) Eligibility Criteria For Projects:
- The project should have been granted ‘Official Co-Production Status’ after April 1, 2022, by both the MIB and the participating countries, under one of the Official Co-Production Treaty (“Official Co-Productions”).
- For documentaries, prior permission to film in India is required to be sought from the MEA before a Co-Production Status application is made to the MIB through the FFO.
D) Incentive Option:
Upon a project being qualified and granted the status of ‘Official Indian Co-Production’ as mentioned above, the Applicant (as defined below) becomes eligible to apply either one of the following schemes (in addition to other benefits outlined in the treaty):
- Incentive for Audio Visual Co-Production with foreign countries (i.e. Part II);
- Incentive for production of foreign films in India covered under the incentives for production of foreign films in India (as dealt with in Part I of this article).
E) Key Requirements for Co-Production Applicants:
| Parameters/Aspect | Requirement |
|---|---|
| Legal Status | The applicant (i.e. a post-production company or an animation studio in this context) has to be an Indian co-producer (whether an individual, partnership, body corporate) established/incorporated in India (“Applicant”); |
| Independent Status | A co-producer should not be linked with another co-producer by common ownership of management or control (except to the extent that such link is inherent in making of the co-production project) |
| Active Participation | Each co-producer is required to play an active role in the co-production. A producer who exists as a little more than a name only (i.e. letterbox company) shall not qualify as a co-producer. |
| Legal Framework | A binding agreement must be entered into between the co-producers in relation to their roles, responsibilities, liabilities, extent of their financial commitments, etc. |
| Multiple Indian Partners | If there is more than one Indian co-producer, the project should identify an “Indian Delegate Co-Producer”. This Indian Delegate Co-Producer shall handle two things: the operations, financing amongst other activities and will be eligible to claim reimbursement. |
F) Application and Disbursal Process:
Stage 1: Interim Approval
| Process Stage | Requirements |
|---|---|
| Initial Application Timing | Application to be made within 4 (four) weeks of grant of ‘Co-Production’ status. |
| Pending Documents: | Any documents/information pending to be intimated by FFO to the Applicant within 20 working days of receipt of application. |
| Submission of Additional Documents (if any): | Within 15 working days of intimation. |
| FFO Processing Timeline: | 20 working days after complete documentation |
| Interim Approval Certificate Validity | Upon evaluation, FFO will issue an interim approval certificate which is valid till 12 months, from issuance. |
Stage 2: Process for 1st Disbursement:
The Applicant can claim (as an option) 50% of the eligible reimbursement once the principal photography/production in India begins coupled with expenditure having been done for the same, along with the supporting documents (as laid down the in the Incentive Scheme):
| Process Stage | Requirements |
|---|---|
| Application Timing: | Post commencement of the project. |
| Pending Documents: | Any documents/information pending to be intimated by FFO to the Applicant within 20 working days of receipt of application. |
| Submission of Additional Documents (if any): | Within 15 working days of intimation. |
| FFO Processing Timeline: | FFO shall process the application for approval by SIEC within by 20 working days after complete documentation. |
| Indemnity Bond/Bank Guarantee: | Applicant is needed to furnish an indemnity bond or bank guarantee for the full amount of 1st disbursal given valid for a period of 1 (one) year. |
Stage 3: Process for Final Disbursement:
| Process Stage | Requirements |
|---|---|
| Application Timing: | Post completion of the project i.e. within 90 days of completion |
| Documentation: | 1. Application to be made along with the documents as mentioned in the document check list section of the Incentive Scheme. 2. NOC is mandatory for all projects which are flagged for screening by the SEO and for Documentaries. |
IV. General guidelines applicable for (Part I) and (Part II) of the Incentive Scheme:
- Legal & Regulatory Compliance: The Applicant, international producer and its employees mandatorily adhere to all applicable Indian laws and regulations, statutes sand ministerial decisions in force from time to time. Further, all individuals engaged in the production hold valid visas.
- Confidentiality Framework: FFO will maintain confidentiality of the information provided by the Applicant but may be required to share certain information with public authorities, regulators, and independent consultants
- Audits & Payment Protocol: FFO maintains audit rights over all financial records through qualified accountants, including direct access to Applicants’ auditors. Digital payment methods and electronic receipts are preferred to ensure smooth processing of reimbursement claims.
- Productions enjoy the advantage of accessing both regional and national incentives, as state-offered filming benefits can be combined with the cash rebate system.
- Promotional Content Requirement: Applicant under incentive the Incentive Scheme under Part I have to provide FFO, on a best effort, with behind-the-scenes content and testimonials to help showcase India as an attractive filming location. Whereby, the Applicants and/or the co-producer applying for incentives under Part II has to as ‘a mandate’ provide FFO with sample footage, rushes shot in India for promotional/marketing purposes.
- Anti- Fraud Measures: Any suspected fraud or misconduct will result in immediate cancellation of benefits and possible permanent ban from future incentives. FFO will report such cases to authorities, with all actions subject to MIB approval.
- Credits for Live Shoots (Part I) and Co-Productions under Part II: The MIB and NFDC/FFO must be given a credit in the end credits or end crawl in all cases on all prints of the film (or other content as applicable), in the form of ‘Filmed in India’ along with FFO logo as provided by FFO in a prominent place. For documentaries, similar credits to be given to MEA.
- Credits In Case OF Post-Production/VFX/Animation Services: All film versions must display ‘Created in India’ credit and FFO logos in end titles, using official formats provided by FFO.
- Documents: The Applicants (both under Part I and Part II) are required to submit the application along with certain documents as specified under Incentive Scheme in the formats provided.
V. CONCLUSION:
The Incentive Scheme offers substantial financial incentives that position India as a competitive destination in the global entertainment landscape, however it also pertinent to note that the Incentive Scheme is to be read together with the International Co-Production Treaties signed between India and the participating countries, as mentioned above.
While the scheme involves detailed legal and regulatory compliance requirements, the potential reimbursement of qualifying expenditure, additional bonuses for significant Indian content, along with the ability to combine national and regional incentives present compelling
opportunities for international producers.
Production companies that approach the scheme strategically, with early and appropriate legal and operational support, will be best positioned to maximize its benefits while minimizing associated risks.
Access the scheme (here)
